July 25, 2008

Amazon (Quietly) Sells Wine

Without much fanfare, Amazon has begun selling wine as part of their "Amazon Fresh" program which delivers groceries to your door (presently only available in "a limited number of Seattle neighborhoods").

AmazonFresh offers beer and wine for attended home delivery. You must be present to take delivery of the beer and wine. If you appear that you might be 35 years old or younger, we will not deliver without a valid picture identification, such as a Driver's License, Passport or Military ID. We will also not deliver beer or wine if you appear intoxicated.

Currently they show 532 wines and sherries and 20 sparklers, ranging from a $4.11 bottle of Ernest & Julio Gallo Twin Valley White Zinfandel to a $179.99 bottle of 2002 Tattinger Comtes de Champange Rose.

Of course, they're not selling wine online to customers nationwide, but it's an interesting development in the online wine space. Amazon invested $30 million in wineshopper.com back in April, 2000. A few months later (August 2000), Wineshopper merged with Wine.com as the dot-com bubble burst.

What would you do differently if your winery's wines were available at Amazon.com?

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Interested to hear what others have to say about this as well. They are gearing up to sell 'nationwide' - where laws allow them to - and will be partnering with a company, from what I hear, to handle the state by state compliance nightmare. There's no doubt that Amazon knows how to put together online businesses successfully, and they understand fulfillment.

Still, I wonder what consumers will think about this. My guess - many will be excited about this new venture - one less thing they have to worry about purchasing elsewhere. And if I'm Amazon, I will certainly make it attractive to think in these terms via free or heavily discounted shipping, plenty of info about each wine, and possibly food and wine pairing suggestions . . .

I guess time will tell . . . Anyone else care to share their thoughts?

The leviathan that is amazon.com is getting ready to launch their national wine store (sometime in September). New hire Amazon wine buyers are contacting producers on the Left Coast and inviting them in. Talk about shooting fish in a barrel.... Who would turn down such an important new channel?

In order to minimize any sort of additional taxation, all staff, even if they are in the field almost all the time, must reside in Seattle.

The winery sets the price--no deep discounts like books (34% of MSRP) if the winery doesn't agree. Amazon reimburses the winery at 50% of the price posted on Amazon. So any discounts will also hurt the winery's bottom line.

Initially, all sales go through the three tier system in the manner established by World Ship Net and New Vine Logistics (the fulfillment arrangement hasn't been announced yet, but Amazon won't be reinventing the wheel). No regional warehouses like wine.com which is not at all involved. This equates to about 26 states. Eventually, this will be augmented by winery direct.

Amazon buyers who subscribe to Amazon's ~Prime~ service ($79/year) get free two day shipping!! (we'll see about that).

My 4,000 case annually producing winedry was approached by an amazon.com winebuyer just recently and we've decided to give them a try with two of our small production wines. Two cases up front (they pick up and store) which he said is a start. We'll see how well it goes. I think someone in the upper tier of Amazon decided to pull the trigger on dealing w/ the individual shipping laws of each state with regards to shipping booze. I think this will solidify much of the confusion and ultimately it'll make things easier for us smaller guys shipping dtc... besides, they link my website on every page my wines are showcased... cheap advertisment

Look, this is no different from an affiliate partnership. If anything this eliminates the wholesaler in certain states. If a winery sets the price (which they will do at the highest level) and the winery gets 50%, the wholesaler will need to some cut (15-30% is usually their take) leaving amazon with 15-20%. This is a basic "affiliate partnership" under usual terms of doing business on the net. The only compromise here is that the wineries will be able to command top level pricing which is very encouraging, but can lead to higher costs. Think oil.

This is quite exciting news, because overall understanding was that internet sales of alcohol are quite limited because of state-by-sate laws, as well as various other regulations.

Even more exciting, I would like to see if such thing would be possible in Canada, because of it's increasing growth of wineries and their wine production. Some say that there is almost 90% sales tax on wine, that might be something to fight first, though.

I find the whole concept of being able to purchase groceries from AmazonFresh to be a great help especially for the homebound. Although, it appears from their first page that one needs to register to obtain detailed information, AmazonFresh does list on their first page the delivery charge as being free over a certain purchase total. The totals are easy to reach any time one visits a grocery store. (I wish AmazonFresh would give more information without asking for signup.)

Our neighborhood grocery store offers to deliver groceries but there is always a substantial delivery fee.

Question: Since AmazonFresh delivers "fresh" the same day or next day in totes, does this qualify as "shipping" and if not in what states is it legal to have AmazonFresh deliver wine? AmazonFresh does appear to offer a wonderful opportunity for small wineries.